Here are five things you must know for Wednesday, May 18:
1. -- Stock Futures Ease
U.S. equity futures were lower on Wednesday following a Tuesday rally.
On Wall Street, futures tied to the Dow Jones Industrial Average indicated a 50-point opening bell tick lower while those linked the S&P 500, which is down 14% for the year, are priced for a 12-point move to the downside. Futures linked to the Nasdaq are looking at a 70-point opening-bell slide.
2. -- Powell Says Fed Determined to Ease Inflation
Federal Reserve Chairman Jerome Powell said the Fed was determined to reduce inflation and reiterated that it hoped to do so without prompting a jump in joblessness. The Fed is aggressively raising rates to reduce price pressures.
In an interview with the The Wall Street Journal's Future of Everything Festival, he signaled that in both June and July, the central bank likely would repeat the half-percentage-point rise in rates it put in place early this month.
"Restoring price stability is an unconditional need. It is something we have to do," he told the Journal. "There could be some pain involved."
3. -- Housing/Mortgage Data Are in Focus
Housing starts and building permits data for the month of April will shine yet another cold light on the state of the U.S. housing market, following the biggest drop in homebuilder sentiment in nearly two years earlier this week.
Housing prices, which are holding at multiyear highs, have yet to retreat in the face of rising interest rates and rapidly increasing borrowing costs, which the Mortgage Bankers' Association will also update prior to the start of trading with its weekly summation of new applications and refinancings.
New-home inventory, however, will be critical in terms of easing pressure on al already stressed market, although forecasts for the April reading, expected at 8:30 a.m. U.S. Eastern, suggest a modest slowdown from March to an annual new construction pace of 1.765 million units.
"This is not 2006; the Fed’s rate hikes will not force current homeowners to sell in large numbers, because very few homebuyers in recent years took out adjustable rate mortgages," said Ian Shepherdson of Pantheon Macroeconomics. "But the surge in rates is clearly choking-off the flow of would-be new buyers."
4. -- Target Shares Slip Before Earnings Report
Target (TGT) shares were 1.5% lower in premarket trading ahead of the retail giant's first-quarter earnings and following the biggest single-day decline for its larger rival, Walmart, (WMT) since 1987.
Walmart cautioned that surging inflation costs, particularly for fuel and labor, would narrow near-term profit margins as it lowered its full-year earnings forecast following a weaker-than-expected first-quarter update on Tuesday. Shares of the world's biggest retailer on Tuesday closed 11% lower at $131.21 each.
Target, which faces similar challenges but doesn't have nearly the same market share as Walmart in terms of grocery sales, is expected to report first-quarter earnings of $3.07 a share, down 17% from last year, on relatively flat revenue of $24.5 billion.
5. -- JPMorgan Holders Reject CEO's $50M Bonus
Shareholders of JPMorgan voted against the company's proposal to pay Chief Executive Jamie Dimon a $50 million retention bonus as part of its compensation plans.
At the annual meeting, less than a third -- 31% -- of the banking giant's holders voted in favor. The vote isn't binding, but The Wall Street Journal called it a rare rebuke to Dimon's leadership of the company. Dimon was paid $34.5 million for as compensation for 2021.
